The Supreme Court on Moday dropped a bombshell in the ongoing coal scam investigation, saying all coal block allocations since 1993 are essentially illegal since the guidelines under which they were distributed were themselves flawed.
The apex court’s ruling is bound to have far-reaching implications for all major power producers as well as those who have captive coal blocks to feed other industries such as steel and aluminium.
The so-called ‘Coalgate’ also played a starring role in the recent national elections, and was held up by the Bharatiya Janata Party as another illustration of corruption and crony capitalism practised by the Congress-led UPA government.
What exactly does the coal-scam entail, though? Here are the 10 basic facts about the scam that you need to know.
1) IN March 2012, a media report revealed the Comptroller and Auditor General of India’s office had in a draft report said that private companies had made windfall gains after an auction process was bypassed in favour of arbitrary allocations of coal blocks. The number quoted at the time was Rs 10.7 lakh crore (Rs 10.7 trillion). The CAG promptly denied the media report, saying the ‘observations’ were ‘exceedingly misleading’.
2) The CAG in its final report in August 2012 said the actual loss to the exchequer because of non-auctioning of coal blocks between 2004 and 2009 was about Rs 1.86 lakh crore, almost a tenth of what initial media reports had been saying.
3) The CAG report’s most damning statement was that the government had had the option to go the competitive auction route by mid-2006, following an opinion by the law ministry, but chose not to do so. Manmohan Singh was Prime Minister at the time in the UPA government and held the coal ministry portfolio briefly in 2004 and then for almost five years between 2007 and 2012.
4) Subsequently, after a complaint by 2 Bharatiya Janata Party members in 2012, the Central Vigilance Commission directed the Central Bureau of Investigation to institute a probe.
5) In mid-August last year, the coal scam took a twist after Coal Minister Sriprakash Jaiswal admitted that some crucial files relating to the investigation between 1993 and 2004 had gone missing. The admission came after a Supreme Court directive to the government to co-operate with the CBI’s inquiry.
6) The Coalgate scam became notable for the role of the CBI in the investigation, as well as the propriety of various bureaucrats and ministers. Early in 2013, CBI director Ranjit Sinha admitted to the SC that its initial report on the scam had been shared with the law minister as well as bureaucrats from the coal ministry and the Prime Minister’s Office, and that certain changes had been made to the report. This had prompted the Supreme Court to term the CBI as a ‘caged parrot’.
7) This admission also led to Law Minister Ashwani Kumar having to resign his position.
8) Some of India’s blue chip companies have also been named in the scam, including Essar, JSPL, Tata Power, and Hindalco. The CBI had also named Kumar Mangalam Birla, chairman of the sprawling Birla group, in a first information report (FIR) relating to Hindalco but on Sunday said it would close the case against the tycoon as well as that against P C Parakh, who was coal secretary during the period when the coal block allocations were made. The CBI will also not question former prime minister Manmohan Singh or Odisha Chief Minister Naveen Patnaik in the case.
9) Earlier this year, Parakh caught everyone by surprise when he said that Manmohan Singh could have, but did not, stop coal ministers Shibu Soren and Dasari Narayan Rao from reversing his own decisions to auction coal blocks. He was speaking at the release of his book Crusader or Conspirator: Coalgate and Other Truths.
10) On Sunday, former CAG head Vinod Rai revealed that he had faced pressure from the UPA government to leave out certain names from the CAG’s report.